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Matthew Smith

Matthew Smith

Posted: May 14, 2010 04:30 PM

News Flash: Oil Companies Sometimes Lie

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As America's environmental catastrophe continues to surface in the oil-slicked Gulf of Mexico, critics of the petroleum industry are rightfully coming out of the woodwork. Whether it's shoddy safety records, toxic pollution, or fueling conflict and corruption, oil companies have unarguably contributed to some of the most serious and damaging corporate activities around the globe.

Yet there is another inconvenient truth to the unseemly resume of the oil giants: Oil companies sometimes lie.

In Burma (Myanmar), over the last twenty years, Chevron, Total, and the Thai company PTTEP -- operators of the forced labor plagued Yadana natural gas pipeline -- have made hundreds of millions, if not billions, in undisclosed payments to the ruling military junta, financing an undemocratic band of generals accused of Crimes Against Humanity. The overall gas profits, estimated at nearly $5 billion dollars from 2000-2008 alone, have provided the Burmese military regime a convenient shield from domestic democratic pressures, such as the 2007 Saffron Revolution, a peaceful but brutally suppressed monk-led uprising that was sparked in part by a dramatic rise in domestic gas prices. Chevron, Total, and PTTEP have in effect undermined U.S. foreign policy toward Burma - a policy intended to promote democracy and human rights, not callous profiteering and overt repression.

But this is old news. A more recent revelation is that the companies have lied about their ability to practice revenue transparency in Burma. Both Chevron and Total have privately told shareholders they are contractually unable to be transparent in their payments to the junta. Their claim is simply untrue.

In 2004, during the landmark lawsuit brought by Burmese villagers in U.S. courts against Unocal Corporation (now Chevron) for complicity in forced labor, torture, and killings along the Yadana pipeline, the companies' contracts with the Myanmar Oil and Gas Enterprise (MOGE) became public documents. In no way do they restrict Chevron, Total, or PTTEP from disclosing their payments to the junta - past, present, and future.

Total has privately claimed the contrary for years. Multiple shareholders have told EarthRights International that the company has claimed their contracts with the junta are confidential, and the company has further claimed that contractual clauses prevent them from disclosing payments to the Burmese state.

Even more recent is new information we obtained suggesting Total's partner Chevron has likewise lied to its shareholders. A few days ago, I received some interesting communications from a longtime Chevron shareholder - the manager of an investment firm - indicating that the American oil giant, which recently reported its largest profit increase in a decade, not only lied to him regarding the company's revenue opacity in Burma, but also to several investment firms, including the one he represents, and to two of America's largest labor unions.

Citing phone calls with Chevron executives, this shareholder and others recall that Chevron rejected requests to be transparent in Burma, claiming their contract with the junta prevented disclosure of any payment information to anyone, including the company's own investors. Like Total, the company also claimed their contracts could not be shared.

The truth is that their contracts are available for the world to see, and have been for six years. Last week, EarthRights International (ERI) published the documents on its website. According to ERI's Legal Director Marco Simons, "while these contracts do require the partners to keep confidential information that they have acquired from MOGE, nothing in them suggests that payments to the regime would qualify as confidential information, or even that the contracts themselves need to be kept confidential."

In other words, Chevron and Total lied.

Last month, we called on these companies to step forward and do the right thing by disclosing their payments to the Burmese junta. I traveled to Bangkok with Naing Htoo from EarthRights International and Wong Aung from the Shwe Gas Movement to launch an initiative urging the companies to become the first oil companies in Burma to practice revenue transparency. With the stalwart backing of an international group of over 160 organizations and individuals, we called on the companies to publish over 18 years of "taxes, fees, royalties, bonuses, and social benefits" paid to the Burmese junta, which has ruled the country in various iterations for nearly 50 years.

The positive development outcomes associated with revenue transparency in the extractive industries are clear. Research indicates that developing states relying on gas and oil revenues are less accountable to their citizens politically and economically, which in turn fuels authoritarianism. Revenue transparency, on the other hand, promotes an open society. According to UCLA political scientist Michael Ross, "in too many countries, dictators use natural resource wealth to keep themselves in power. Revenue secrecy makes this possible. Revenue transparency can help change it."

Transparency can also help with corruption control, which is particularly important in Burma, a country recently ranked by Transparency International as the third most corrupt in the world, behind Afghanistan and Somalia.

But the bottom line is that the people of Burma have a right to know what Chevron, Total, and PTTEP have paid the state for public resources.

Far from a marginalized effort, this campaign has notable backers, including Mary Robinson, the first woman President of Ireland, former U.N. High Commissioner for Human Rights, and veritable leader in the field of business and human rights. It's also backed by Kerry Kennedy, the founder of the Robert F. Kennedy Center for Justice and Human Rights and longtime advocate of speaking truth to power; and Kjell Magne Bondevik, the two-time Prime Minister of oil-rich Norway and founding president of the Oslo Center for Peace and Human Rights. Over 65 organizations from Burma also back the effort, representing every major ethnic group in the diverse country.

Documentation of Chevron and Total's dishonesty and lack of revenue transparency in Burma is markedly different than the common criticisms waged against the companies. They usually boil under the spotlight for their complicity in forced labor, killings, and other abuses committed by the Burmese Tatmadaw (Army) guarding their 40-mile long gas pipeline to Thailand, abuses we continue to document today. While revenue transparency will in no way absolve the companies of their responsibility for these ongoing abuses, it will be a critical step in the right direction.

Coincidentally, they already champion transparency. Both Chevron and Total have in general acknowledged the potential for positive development outcomes through revenue transparency, and both companies in effect recognize that revenue secrecy is increasingly indefensible. Why else would they cite fabricated contractual restrictions as obstacles to transparency, rather than simply refuse in principle to practice it? In other words, their lies are the tribute vice pays to virtue.

The yes or no question remains: will Total, Chevron, and PTTEP do something positive for Burma and disclose details of their last 18 years of payments to the junta?